Report No.

1
September 2009

The State of REDD Negotiations and Possible Outcomes at COP15

A September 2009 Update
Pablo Gutman pablo.gutman@wwfus.org

International Financing for REDD

A Project of WWF US Policy Program

This is a report of the project “International Financing for REDD,” undertaken by WWF US Policy
Program between July and December 2009, as part of WWF FC NI Program “Engaging Civil Society in
REDD Programs.

The focus of the “International Financing for REDD” project was: (a) To further UNFCCC parties’
understanding of the role and sequencing of public, private and market funding for REDD; and, (b) To
discuss institutional and funding arrangements for REDD at international and national level

The project worked by (a) engaging in the international REDD discussion in the run up to COP15; (b)
producing or participating in the production of technical reviews, reports and proposals; (c) advising
WWF network on these issues; and (d) collaborating with WWF country offices in the review of country
level arrangements for REDD.

Please direct queries regarding the project to its director Pablo Gutman at Pablo.gutman@wwfus.org

Table of Content

1. REDD, a forerunner of global climate change negotiations

a. Technical advances
b. From REDD to REDD+
c. Endorsing a 3 (or 4) phases approach to REDD
d. REDD have unique development and social implications
e. Funding needs and funding sources
f. Early actions
g. Institutional design

2. Five REDD+ Scenarios at COP15

a. A new fully-fledged UNFCCC stand-alone REDD+ mechanism
b. Making REDD+ part of the overall mitigation architecture
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 c. A heavily out-sourced REDD+ Mechanism
d. A REDD Mechanism with limited functions
e. No or minimal advances on REDD+

1. REDD: a forerunner of global climate change negotiations

Since Bali (December 2007), the international REDD discussions have made significant progress, and in
less than 2 years UNFCCC parties and partners have tabled over 50 REDD proposals; many sketchy, but
some quite detailed. Even more important some 40 developing countries have actually initiated REDD
activities (mostly preparedness or readiness activities) with support from several international REDD
funds. Although REDD advances are in their initial state, and way behind the size required to bring
REDD to scale, lessons are beginning to percolate and have positioned REDD as a forerunner of global
climate change negotiations. Below I summarize some REDD facts and issues as of early September
2009.

Technical advances: In the technical front, the UNFCCC SBSTA, the IPCCC, and experts from many
quarters (including the recently appointed Technical Advisory Panels fo the World Bank FCPF and UN
REDDD programs) , have worked out, or are currently working on methods to address many of the
concerns raised early in the REDD discussion, regarding for example global and national reference levels,
leakage, permanence and additionality; what and how should be measured reported and verified (MRV),
and more. In a nutshell, adequate methodologies to support the MRV of a global REDD program are at
hand, once the parties have agree on a REDD design. Similar solutions for AFOLU are less developed, but
there is a consensus that a REDD mechanism could be put in place, and AFOLU activities could be added
in the future. (see for example the REDD related work of SBSTA, the GCP Little REDD Book, the work if
the Terrestrial Carbon Group).

From REDD to REDD+ Another important area of progress is the agreement achieved at the AWG-LCA
discussions, to move from REDD to REDD+, the latter encompassing “reduced emissions for
deforestation and degradation, enhancement of stocks, sustainable forest management and
conservation (see Revised Negotiation Text AWGLCA/2009/INF.1 – 22 June 2009).

Endorsing a 3 (or 4) phases approach to REDD: A phased approach to mitigation in developing

countries was championed by many quarters, including WWF, and at least in its initial preparatory phase
has been adopted by the World Bank and the UN-REDD readiness programs. Last August the approach
made its way to the negotiation text, now including -- Phase 1 capacity building; Phase 2a policies
implementation; Phase 2b initial REDD activities with proxy based funding; and Phase 3 full size REDD
activities with result based funding ( see new paragraph 106 of the negotiation document agreed at the
August 2009 Bonn intercessional consultation). Moreover the phased approach has been also
suggested at the NAMAs discussion

REDD have unique development and social implications Tropical forests and REDD potential is strongly
concentrated in a short number of countries, therefore, decisions about REDD (and even more about
AFOLU) can affect a large percentage of a country territory and compromise the livelihoods of large
numbers of rural and indigenous populations. No wonder then that considerations of social and
environmental safeguards in REDD programs as well as concerns about REDD countries control about
their development strategies have been major issues in international REDD discussions
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Regarding funding needs and funding sources: we now have a good number of estimates of how much
it would cost to implement country-wide REDD programs. Of course all estimates are based in
simplifying assumptions and face considerable uncertainties. Still, they offer a good base to discuss the
costs of a global REDD initiative. For instance, 25 to 50 billion Euros for abatement based payments per
year, may be required around 2020 to achieve cero tropical deforestation and degradation by 2050 (See
IWGIFR, 2009).

As for funding sources, parties and partners have tabled, and researchers have analyzed the pros and
cons of the full gamut of existing and possible funding sources and financial instruments; from public
funds to markets and private investors. An important take away here is that REDD financing would
require mobilizing funds from many different sources, hence the need for a coordinated global REDD
strategy to guide national plans and international funding.

Early actions: A recent focus of REDD+ discussions has been how to keep momentum and scale up
current REDD activities during 2010-2012, that is, until a new agreement replace the Kyoto protocol, or
even during a longer period ( through 2015?) that may be required before a new UNFCCC REDD+
mechanisms is up and running. The discussion has been leaded by the Informal Working Group on Intern
REDD Financing (IWGIFR) with the participation of some 30 countries and the Secretary of the Norway
government. The IWGIFR has produced interesting technical insights on the costs and challenges of such
interim actions (e.g. the costs of putting some 40 to 45 forest countries through an initial readiness
phase, and a subsequent enabling /initial activities phase (phases 1 and 2a) funded at full implementing
costs would be between 400 to 500 million Euros a year, during a 5 year period). Actual delivery has
been more elusive and thus far the IWGIFR process has failed to elicit new funding or REDD
commitments. (see IWGIFR, 2009) .

On institutional design issues and using as a reference the latest version of the AWG LCA “Negotiation
Text” there have been both progress and stalemates.1
On the progress side, beyond dozens of alternative wordings, most parties agree that:
COP15 needs to enshrine a REDD+ mechanism composed of at least (a) a governing body (or
bodies), (b) a REDD+ fund; (c) a REDD+ registry , and (e) technical resources.2
That developing countries participation in REDD+ will be voluntary, based in the principle of
common but differentiated responsibilities and respective capabilities, and would depend on
developed countries providing adequate, predictable and sustainable financing and technical
support.
There is also an ongoing discussion regarding what could be advanced as COP resolutions that
would not need to go into a new treaty. So that COP15 could give the framework of the new
agreement while many issues could be left to sort out after COP15 and b e submitted for
approval to COP16 or COP17 .

1
See pgs. 110 to 129 in the 22 June 2009 version of the Negotiation Text, at
http://unfccc.int/resource/docs/2009/awglca6/eng/inf01.pdf
2
The Negotiation Text uses different words, including REDD+ Mechanism; REDD+ Coordinating Mechanism;
REDD+ Board; Supreme Body of the Mechanism; Forest Carbon Mechanism; and, in the less ambitious
renderings “Contact Group.”
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This is not to minimize the stalemates that are numerous and persistent. For instance regarding:
Whether REDD+ plus should be tailored as a mechanism to reduce compliance costs in Annex I
countries (funded by carbon offset markets); as a mechanism to attain GHG reductions beyond
Annex I commitments (no access to offset markets); as a mechanism to support sustainable
development in developing countries (payments for more than CO2 emission reductions); or a
combination of these three objectives;
The origin and size of REDD+ funds,
The criteria to allocate REDD funding. For example what REDD activities would be eligible; at
what scale (national vs. sub-national); what baselines to adopt (emissions or carbon stocks); and
what should be MRVed and for what purpose (MRV all REDD projects or only the ones that
receive international funding?).
Whether REDD+ should be totally or partially integrated in the funding for mitigation
architecture (NAMAs).

2. REDD scenarios at COP15

How far will COP15 be able to advance the REDD agenda is still anybody’s guess. According to country
negotiators and people at the UNFCCC Sec, the final REDD section of the COP15 agreement will
probably be half or at most one page, mostly about general principles plus a few specific decisions to
keep the REDD+ ball rolling. Few expect that the REDD+ section will include country level commitments
of any type.

Below we have mapped several possible outcomes, from more ambitious to less so, they are based on
how many and how far the COP15 agreement would take up the four components of a REDD+
mechanism that have been repeatedly mentioned in the negotiations, namely : (a) a COP mandated
REDD+ governance body; (b) a COP mandated REDD+ Fund (or a REDD+ window in a larger Mitigation
Fund); (c) a REDD+ Registry; and (d) a COP mandated (or related) technical support.

What could happen to REDD at COP15: Options / Pros / Cons / Existing Models

A. A new fully-fledged UNFCCC stand-alone REDD+ Mechanism could be endorsed at COP15

With the four components – governance bodies; a registry, a REDD+ fund, and technical support.

Pros: If well managed, a new fully fledged UNFCCC REDD+ mechanism could bring momentum and
visibility to REDD+ and could have a large impact. It would be fully accountable to the COP. It is the
position favored by many REDD developing countries

Cons: A full-fledged stand alone REDD+ Mechanism may take several years to be operational may not
attract high levels of funding and, at least in its initial years, may lack needed expertise.

Possible stumbling blocks Securing adequate funding

Opportunities to reduce complexity and/or to increase appeal and early deliver in this option: (a)

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focusing on initial arrangements, leaving for down the road issues that can be decided later; (b)
coordination with outside UNFCC ongoing REDD activities may accelerate delivery.

Existing models: This arrangement would be similar to a new GEF or a new development bank or
development fund but fully devoted to REDD+ and under the aegis of the COP.

B. Making REDD+ part of the overall mitigation architecture

Pros: It moves the REDD+ discussion into the more encompassing framework of overall funding for
climate change; it may increase coherence and reduce overlapping. It is a position favored by many
UNFCCC parties both among developing and developed countries

Cons: Currently the overall mitigation architecture discussion looks more cumbersome and more
entangled than the REDD one.

Possible stumbling blocks REDD interested countries may see this alternative as a way to delay a REDD+
agreement.

Opportunities to reduce complexity and/or to increase appeal and early deliver in this option: An
overall mitigation design that allows the more advanced parts to forge ahead, e.g. the REDD+ window of
the “Climate Fund;” the REDD+ section of the Registry, etc.

Existing models: This arrangement would be similar to a new GEF or a new Climate fund, with REDD+
being one of several priority programs and investment areas. All under the aegis of the COP.

C. A heavily out-sourced REDD+ Mechanism

In this model, the REDD+ Mechanism will still encompass all four components -- governance bodies; a
Registry, a REDD+ fund, and technical support -- but one or more of these components would be partially
or totally outsourced to existing or new institutions either related to the UNFCCC and the COP or
independent from them.

Pros: Out-sourcing part of the REDD+ Mechanism functions to existing entities inside or outside the
current UNFCCC COP realm could accelerate the implementation of a REDD+ Mechanism, reduce costs,
and assuage concerns from some UNFCCC parties, regarding effectiveness and efficiency of the REDD+
mechanism.

Cons: Some out-sourcing seems to be non-controversial. For example outsourcing technical functions to
UNFCCC organs as SBSTA or even to completely independent technical advisor groups has widespread
support among COP parties. On the other hand, outsourcing the management and allocation of funds is
strongly contested by many developing countries that want to keep these functions under the COP
control.

Possible stumbling blocks: What exactly would be out-sourced and what level of governance and control
will remain under the COP authority may raise serious opposition to some types of outsourcing.

Opportunities to reduce complexity and/or to increase appeal and early deliver in this option: (a)
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retaining a strong COP overlook and final control may easy opposition to outsourcing, (b) revamping the
governance procedures at the outsourced agency may also address concerns of some UNFCCC parties.

Existing models: (a) The GEF acting as the interim financial mechanism of the UNFCCC is an example of
outsourcing in full one of the four components ( the fund) and also a large part of other two functions
(governance , and technical); (b) The recently created Adaptation Fund, retains the fund operation
function and the overall governance under the COP control, but delegates a good deal of the governance
and technical functions to the GEF that act as the AF Secretary; (c) proposals to channel all or a majority
of new REDD funding through some of existing (e.g. World Bank) or newly created institution (the
International Carbon Fund) are yet another example of outsourcing some or all of the REDD+ mechanism
functions; (d) As mentioned above, cases of outsourcing technical functions abound both inside and
outside the UNFCCC and usually arise little or no conflict, beginning with the fact that the IPCCC depends
from the UNEP and the WMO, not from the UNFCCC.

D. A REDD+ Mechanism with limited functions

In this case the REDD+ mechanism that would emerge from COP15 would be missing one or more of the
four components - governance bodies; a registry, a REDD fund, and technical support—not because they
have been outsourced, but because they would not exist. For example COP15 could end establishing a
REDD+ Mechanism with only governance and technical functions, but lacking a REDD+ Fund.

Pros: The less functions the easer the agreement. A partial REDD+ Mechanism may be better than no
agreement at all. Some functions may be eliminated not for lack of agreement but because of the REDD+
mechanism design. For example by design the CDM has no fund, and no fund operation functions
attached. It is essentially a clearinghouse mechanism supported by governance and technical functions.

Cons: A partial REDD+ mechanism may take momentum away from REDD, may discourage many key
REDD+ stakeholders, and may also negatively impact expectations for agreement in other areas of the
COP15 negotiations.

Possible stumbling blocks REDD+ interested countries perception that this may be a dead end for REDD+

Opportunities to reduce complexity and/or to increase appeal and early deliver in this option: A REDD+
Mechanism with fewer functions has little complexity to begin with. Currently considerable REDD action
is happening outside the UNFCCC mandate. It could be argue that even if COP15 fails to put in place a
new REDD+ Fund, launching a strong REDD+ governance and technical function inside the UNFCCC
framework may still accomplish important results in leading and coordinate ongoing REDD programs.

Existing models: As mentioned above the CDM is an example of a UNFCCC mechanism that only has
governance and technical functions.

E. No or minimal advances on REDD.

COP15 may fail to agree on a REDD+ governance mechanism and may go no further than designating a
“contact group” to process REDD+ related information and proposals to be channeled to the COP, plus
endorsing or giving some guidance to ongoing REDD activities outside the UNFCCC control .

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Pros: Few. It may energize initiatives and funding outside the UNFCCC framework to “fill the void” But it
could have the opposite effect too.

Cons: May take momentum away from REDD, may discourage many key REDD+ stakeholders, it may
negatively impact expectations for agreement in other areas of the COP15 negotiations. Also it may
discourage or disorient ongoing REDD activities outside the UNFCCC.

Possible stumbling blocks REDD+ interested countries perception that this may be a dead end for REDD+

Existing models: this would be business as usual with an array of non UNFCCC, mostly small funding
windows and no clear follow up and scale up strategy.

References
Global Canopy Programme (2008) “The Little REDD Book. A guide to governmental and non-
governmental proposals for reducing emissions from deforestation and degradation” GCP, Oxford
Informal Working Group on Interim Finance for REDD (IWGIFR) (2009) “Preliminary Report” August
28, 2009
Streck, Gomez-Echeverry, Gutman, Loisel and Werksman (2009) “REDD Institutional Options
Assessment” Draft Version. Meridian Institute, August 2009
UNFCCC, (2009) “Revised negotiation text” FCCC/AWGLA/2009/INF.1
UNFCCC (2009) August 2009 modifications to the negotiation text, available at
http://rcpt.yousendit.com/726953421/7ccc9cf215ebbc42db2e5631d95a4115